74 Phil 560 Civil Law Torts and Damages Distinction of Liability of

Employers Under Article 2180 and Their Liability for Breach of Contract
Vasquez vs. Borja
In January 1932, Francisco De Borja entered into a contract of sale with the
NVSD (Natividad-Vasquez Sabani Development Co., Inc.). The subject of the
sale was 4,000 cavans of rice valued at Php2.10 per cavan. On behalf of the
company, the contract was executed by Antonio Vasquez as the companys
acting president. NVSD. only delivered 2,488 cavans and failed and refused
despite demand to deliver the rest hence De Borja incurred damages
(apparently, NVSD was insolvent). He then sue Vasquez for payment of
damages.
ISSUE: Whether or not Vasquez is liable for damages.
HELD: No. Vasquez is not party to the contract as it was NVSD which De
Borja contracted with. It is well known that a corporation is an artificial being
invested by law with a personality of its own, separate and distinct from that
of its stockholders and from that of its officers who manage and run its
affairs. The mere fact that its personality is owing to a legal fiction and that it
necessarily has to act thru its agents, does not make the latter personally
liable on a contract duly entered into, or for an act lawfully performed, by
them for an in its behalf.
The fact that the corporation, acting thru Vazquez as its manager, was guilty
of negligence in the fulfillment of the contract did not make Vazquez
principally or even subsidiarily liable for such negligence. Since it was the
corporations contract, its non fulfillment, whether due to negligence or fault
or to any other cause, made the corporation and not its agent liable.
JUSTICE PARAS Dissenting :
Vasquez as president of NVSD is liable for damages. Vasquez, as acting
president and manager of NVSD, and with full knowledge of the then
insolvent status of his company, agreed to sell to De Borja 4,000 cavans of
palay. Further, NVSD was soon thereafter dissolved.